- As commercial real estate prices downtown hit rock bottom, leases are rising. The former Soin International Building at First and Ludlow streets with an appraised value exceeding $1 million, sold earlier this year at absolute auction for $121,000. A new housing project a few blocks away sold out as buyers snagged mortgages at apartment rental prices and got a 10-year tax abatement, too.
- A newly built Montessori school is operating along riverfront on what had been abandoned lots; a major rebuild of Brown Street is under way as are other streetscape upgrades and a new building is up in business incubator Tech Town; the Dayton Metro Library system is seeking a bond issue that would double the size of the library.
- A $280 million reconstruction of the Interstate-75 interchange downtown that begins late this year will create smoother entry and exit when the project completes.
For Michelle Kaye, client relations director at PNC Bank and a downtown watcher for more than 20 years, timing is good. “There are a lot of good things going on downtown, and for once, they are happening at the same time. People are in the same book, for the first time in a long time. Business activity is picking up.”
The $4 million Great Miami River project, River Run, will remove the hazardous Monument Avenue low dam and build two structures out of large boulders that will span the river. Each structure will have two passageways with drops: one slower passageway for canoes and a faster whitewater passage for kayaks.
Besides taking out the dangerous dam, supporters say the project will complement the RiverScape entertainment venue, the regional biking trail network, Schuster Performing Arts Center, Victoria Theatre and Dayton Dragons baseball to solidify downtown as a lifestyle spot. Dayton has already spent $38 million since 1999 to enhance the riverfront. If permitting by the U.S. Army Corps of Engineers stays on track, River Run could be ready in 2014.
“We are building on momentum here,” said Carrie Scarff, deputy director of Five Rivers MetroPark, the overseer of River Run. “The ship seems to be making the turn around the corner. It will change the personality of the city — the feel, the energy level.”
Interest among those looking at downtown spaces has jumped, said Shelley Dickstein, assistant city manager. “It’s attractive to business right now,” she said.
There are powerful headwinds. Cut-rate tax deals pull business to the immediate suburbs and beyond. The national economy remains shaky and hopes for a full recovery rise and fall with each piece of often contradictory economic news.
But a survey by CoStar Group showed an uptick in central business district office leases in the first quarter — the first in some time. There was a net rise of 99,490 square feet leased compared to a drop of leased space in the fourth quarter of 28,619 square feet and drops through 2011.
The overall vacancy rate in Dayton’s central business district at the end of the first quarter 2012 decreased to 21.6 percent from a vacancy rate of 22.6 percent at the end of the fourth quarter 2011, CoStar said.
Central downtown has 21,508 workers, down from 24,461 in 2006, according to the Downtown Dayton Partnership. For now, it is the domain of government, banks, law offices and health care employers, such as Premier Health Partners.
Premier is moving 900 employees to new headquarters at 110 North Main St., some from outside downtown, most from another downtown building. Medicaid administrator, CareSource, is hiring something in excess of 100 new employees who will be located downtown. It’s the biggest addition to the day worker population on the horizon, said Sandy Gudorf, president of the Downtown Dayton Partnership.
“We have had our struggles no doubt, but I think we are on the rebound,” she said. “Commercial real estate, we’ve hit bottom, we are starting to climb upward. It’s about restoring community confidence. That is a critical part of anything. It’s about presenting, creating, and having the total package of an urban center that meets the changing needs of our community. The river is a critical part of that.”
Deeply discounted deals attracted self-made real estate investor Marinko Gvozdanovic, 51, of Cincinnati, who has built a small empire of residential, office and industrial holdings after buying his first property in high school. He said he is confident he is making the right move.
Two years ago, Gvozdanovic purchased the former 27-story Mead Tower on Courthouse Square for $1.4 million, following up by buying the Leigh Building, 100 W. Second St., for the 295-space parking garage.
He is leasing space at the former Mead Tower for $12 per square foot — all services included, utilities, too. It is a price unheard of years ago for prime downtown space.
The Soin International Building, 33 W. First St., is now his for a fraction of appraised value after a March auction. Gvozdanovic said the auction had many local potential bidders as well as out-of-town and out-of-state bidders competing. It is about half occupied and repairs and redecorating are underway.
For Gvozdanovic, it is market bottom. He was able to take advantage of “the level of confidence in the local environment — low,” he said. “It’s still speculative, but it’s a long-term play.”
Stephanie Dietz of Charles Simms Development said she sold all 17 attached housing units at Patterson Square, a block from riverfront and a block from Fifth Third Field as fast as they could be built. Prices started at $139,900.
“There is a need for downtown housing and with that price point, people get in for what they are paying for rent,” she said. She called a 10-year property tax exemption on the building, not the land, “a huge thing” the helped drive sales.
“From my perspective, things seem to be really looking up,” Dietz said. “Interest rates are great, and there are definitely people looking to buy.”
As the number of downtown dwellers rise, the district is more appealing for entrepreneurs like Kimberly Collett, 42, who opened Mediterranean-influenced “Olive, an urban dive,” last year in the old Wympee’s eatery at 416 E. Third St.
She says the 15-employee restaurant has been a hit, with four times the business expected. “We are doing gangbusters,” she said.
Collett expects more people like herself, smaller, independent niche market business people, to drive the next wave of downtown business.
“It will be those people who make downtown vibrant again,” she said. “If anything, we are creating our own community that we want. We are creating the spaces we want.”
Contact this reporter at (937) 225-7407 or sbennish@coxinc.com.
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